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Gold/Mining/Energy : Gold & Gold Stock Analysis
GLD 375.93-1.8%Nov 14 4:00 PM EST
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To: Sam who wrote (1274)1/31/2004 10:26:54 PM
From: Wade  Read Replies (1) of 29622
 
Sam,

The purposes of using sell stops are to preserve gains and/or for safety. The position of the stop has to be just right. For example:

1. Protect short term gain - set a target that you are willing to give back. This method usually do not work well because short term volatility....as you experienced. The best way is to place the stop at a small notch below a recent support. Of course, you need a smart entry point first.

2. Protect long term gain - Give the long term investment plenty room to breath. Place the stop order below key support line or 200-DMA. You can estimate the width of the swings with a linear regression line, or to use a Bollinger Band.

Hope my 2 paper cents worth at least a real penny.<VBG>

Wade
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